The Sugar Regulatory Administration (SRA) has issued a moratorium on molasses importation, effective immediately, while it reviews policies to find a balance beneficial to local producers and industrial users.
The move, outlined in Molasses Order No. 1 issued on Tuesday, September 30, comes after sugar stakeholders called for action following a significant drop in the withdrawal and price of local molasses.
The moratorium will last until the end of this year but may be extended or lifted based on stock balances, an SRA statement said on Thursday. Oct. 2, said.
While the SRA will no longer process clearances for release of imported molasses, the order does not cover applications filed prior to Molasses Order No. 1 or molasses already in transit.
The SRA noted a 28 percent increase in molasses importation during the last crop year, totaling 853,285 metric tons (MT).
This surge occurred despite a 20.5 percent increase in domestic production, which amounted to 1.176 million MT. The result is a substantial millsite stock balance of 303,961 MT as of the end of August, the SRA said.
Consequently, the average price of domestic molasses has plummeted to ₱12,000 per MT, a drop of about 30 percent from the previous crop year’s average of ₱18,000 per MT, it said.
Most domestic molasses production is consumed by ethanol producers, who use it to meet the biofuel law’s mandate for blending local ethanol into gasoline.
SRA Administrator Pablo Luis Azcona said the agency will take a closer look at the “discrepancy” between the volume of local molasses used and the actual alcohol production.
“We need to see why the local molasses purchased from the farmers still remain unwithdrawn and unused. Hence, there is no need to import,” Azcona said.
He stressed the importance of identifying where ethanol and alcohol producers are sourcing their feedstock.
“For the ethanol producers, we hope that their feedstock is really local as the biofuel law states,” Azcona said, adding that alcohol producers should “consume the local produce first, which is actually of higher quality, prior to resorting to lower quality imported molasses.”
Azcona also expressed surprise that the SRA lacked concrete policies on molasses importation and allocation to ensure local produce is consumed first.
The SRA is assuring farmers and millers that a new performance-based policy for import allocation will be crafted. This is intended to create a “calibrated, fair, and objective process” for future molasses importation.*